Pakistan Hikes Luxury Fuel Levy On Premium Petrol By Rs 200, Expects Rs 9bn Monthly Relief

Last Updated:March 22, 2026, 22:52 IST

The move targets luxury-grade fuel used mainly by owners of high-end imported vehicles, the government said.

The Pakistani government has approved a sharp increase in the petroleum development levy (PDL) on high‑octane premium petrol, raising it from Rs 100 per litre to Rs 300 per litre as global fuel costs rise amid escalating tension in the Middle East linked to the ongoing war in Iran.

The move targets luxury-grade fuel used mainly by owners of high-end imported vehicles, Pakistani sources told CNN-News18 on Sunday.

According to the source, this Rs 200-per-litre hike is specifically aimed at affluent users and is expected to generate around Rs 9 billion in monthly revenue, further stressing that ordinary petrol prices for the general public will remain unaffected.

Pakistan’s Prime Minister Shehbaz Sharif has defended the policy, saying it is intended to place the burden on wealthier consumers rather than ordinary citizens, the source added.

Pakistan’s Economy On Edge

The tax increase comes amid growing concerns over Pakistan’s vulnerability to global energy supply disruptions.

A fresh assessment by the Pakistan Institute of Development Economics warned that any disruption in the Strait of Hormuz — through which nearly one-fifth of the world’s petroleum passes — could trigger inflation, currency pressures, and wider economic instability.

The report, titled “Pakistan’s Exposure to a Strait of Hormuz Shock: Fuel Pricing, Inflation, and External Vulnerability", highlights how dependent Pakistan remains on imported energy.

It warned that even minor disruptions could push inflation close to 9% within months, with severe shocks potentially driving it above 12%. Rising oil prices, freight costs, insurance premiums, and taxes would combine to increase domestic fuel prices sharply.

High-speed diesel, crucial for transport, agriculture, and food supply chains, was flagged as a key driver of inflation.

Analysts say Pakistan’s economic structure is highly exposed, and any geopolitical tension in the Gulf could quickly escalate into a domestic financial crisis.

(With inputs from agencies)

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